Despite the economic headwinds driven by rising inflation and a global energy crisis, affluent retirees are demanding resort-style housing with all the amenities more than ever before. Traditionally dreary nursing homes are not an option for what the New York Times recently called “the silver tsunami” – the coming wave of aging baby boomers who are still socially and culturally active and have become accustomed to a higher quality of life.
But the shortage of suitable full-service communities for older people in the present day suggests future pensioners will be stuck, as many of today’s pensioners are, in large houses that are totally unsuited for their physical and social needs. But, as most retirement housing in the UK is built for social renters, the rapidly aging wealthier population means there is a growing demand for more 5-star amenities.
Growing luxury retirement sector in the UK
Last year’s census figures show almost one in five people in England and Wales are 65 or older. According to research by estate agents Knight Frank, UK pensioners over age 60 hold £1.23 trillion of unmortgaged housing wealth, with 25% considering a move to retirement housing in the near future.
The property consultant firm also reported a record £2 billion was invested in UK senior developments in the first nine months of 2022, and the total is set to rise to £3 billion by the end of the year – that’s a 50% year-on-year increase, as backers including UK pension funds and private equity pile into the sector.
A large number of boomers who currently live in larger houses that they paid off years ago have nowhere to go when they want to downsize because there are too few appreciable properties on the market. Having benefited from housing price appreciation over the years, seniors possess substantial equity in their current residential real estate.
Real estate developers are trying to meet the increased demand for this niche market
Experts say there’s a gap to fill for smart developers who can provide plush accommodations that are tailored for wealthy older people. That means the luxury retirement sector could be the next area of the property market to see growth – if builders can find suitable sites to develop.
According to retirement placement servicer, Lottie, the top luxury developments for seniors are now offering facilities designed to meet almost any need.
With apartment prices ranging from £895,000-£2,225,000, West London’s Riverstone Fulham boasts plenty of top-notch conveniences, including a gym and exercise studio, spa, hair and nail salon, restaurant, espresso bar, cinema, and landscaped gardens along the River Thames.
Fitzjohn’s Retirement Village in Northwest London also offers luxe facilities complete with a lounge bar, spa, landscaped gardens, and 24-hour concierge service for its senior residents shelling out at least £2,220,000 when buying (£6,478 per month when renting) one of its artistically designed apartments.
For those looking for a bit more affordable option, Cheshire’s Gifford Lea Retirement Village rates highly for its bucolic countryside location outside of the big city hustle and bustle. With prices starting from £246,000 for a one-bedroom property or £412,000 for a two-bedroom property, residents can benefit from 24/7 site security, a wellness spa, relaxation pool, a beauty salon, hairdressers, a bistro restaurant, gym, and fitness studio.
Lease-only approach
Wealth management experts say renting is another option retirees should consider. Leasing doesn’t require the same commitment as buying and skips the costs associated with purchasing property in a later living development, such as a deferred payment.
“Instead of buying a retirement property after selling your main residence, you could potentially invest a portion of the proceeds in a diversified investment portfolio that would provide you with a sustainable income to fund your cost of living while still maintaining the overall value of your estate,” said Chris Lean, investment director, Aisa International.
Lease-only retirement community, Auriens, is redefining later living by offering its seniors a personal concierge to do anything from booking a table to booking a holiday, the services of a bespoke Range Rover and driver, personalized meals cooked by a top chef, housekeeping, maintenance, and even interior decorating. Prices for the Chelsea residences range from £13,750-£16,750 per month depending on the size of the apartment.
Financial experts also say renting instead of buying might make sense for older retirees looking to start gifting their families before the inheritance tax kicks in.
“This type of investment portfolio could be devised to maximize returns for your tolerance to risk, permit withdrawals as required, avoid liquidity issues, and significantly reduce your inheritance tax liability utilizing an HMRC-approved tax structure,” said Lean.
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The views expressed in this article are not to be construed as personal advice. You should contact a qualified and ideally regulated adviser in order to obtain up-to-date personal advice with regard to your own personal circumstances. If you do not then you are acting under your own authority and deemed “execution only”. The author does not accept any liability for people acting without personalised advice, who base a decision on views expressed in this generic article. Where this article is dated then it is based on legislation as of the date. Legislation changes but articles are rarely updated, although sometimes a new article is written; so, please check for later articles or changes in legislation on official government websites, as this article should not be relied on in isolation.
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